Thousands of consumers may be spared interest charges on so-called interest-free or 0% finance deals, following action to change the way such schemes are marketed.

When a consumer signs an interest-free deal they need to know that they are getting just that

John Vickers, director general of Fair Trading

The Office of Fair Trading has now forced Dixons Group, which includes Dixons, Currys, The Link and PC World, to stop advertising the deals under the heading "interest-free", because it said the adverts were breaking the law and could mislead customers.

While credit deals are often advertised as interest-free, in practice they can leave customers with hefty bills.

This is because if customers fail to pay off the debt before the end of the interest-free period, interest is charged for the whole period of the loan, with some companies charging interest as high as 29.9%.

The OFT also announced on Wednesday that it had forced Harvey Furnishings and Magnum to stop using the terms in their credit advertisements.

Rewording

The OFT said that the use of interest-free credit options, or 0% finance, breached section 7(c) of the Consumer Credit (Advertisements) Regulations 1989.

It said that this effectively banned any advert that stated or implied the consumer could get interest-free credit where in fact they would be liable for contractual charges.

A spokesman for Dixons Group said that it made "strenuous efforts" to make its terms and conditions clear, but would be changing the wording of its adverts.

He said that Currys would use the words "Interest Option Plan" instead of interest-free or 0% finance, but it had not yet decided on what to call the schemes at Dixons.

Speedy action

The OFT has new powers under the Stop Now Regulations introduced in 2001.

It can now act more swiftly against traders, and apply for a court order against traders who breach regulations.

It is required to consult with companies or traders whom it believes are in breach of consumer laws before taking court action.

Other orders

It is now approaching a number of well-known High Street names.

Four other companies - Allied Carpets, Furnitureland, Fairway Furniture and Gregory and Porritts agreed to change their advertising in November 2001 after the OFT wrote to them.

John Vickers, Direct General of Fair Trading, said: "I welcome the decision taken by these companies and urge other companies to follow without delay.

"When a consumer signs an interest free-deal they need to know that they are getting just that."